This brief published by the National Center for Policy Analysis (NCPA) predicts that ineligible individuals are likely to seek enrollment in subsidized individual insurance because subsidy benefits are more generous than the tax benefits of employer-sponsored care.  The brief notes that the CBO’s cost projections assume that only 18 million people will particulate in health care reform’s insurance exchanges because many residents are ineligible based on their current health coverage through Medicaid or employer-sponsored insurance.  However, the brief concludes that exchange subsidies may incentivize leaving jobs with employer-sponsored coverage to obtain subsidized individual coverage, potentially increasing government subsidy expenditures.  The report notes that, based only on income and family status, 127 million people would qualify for the subsidies. 

From the report:

At lower income levels, the generous subsidies in the House health bill outstrip the tax break on employer-provided plans. For that reason, the bill places restrictions on switching from employer plans to the health exchange programs. With such large differences in subsidies, however, people are bound to find ways to switch over, even if it means changing jobs. This awkward arrangement probably means that the official cost estimate for the bill is unrealistically low.

National Center for Policy Analysis. (2010). Health insurance exchange subsidies create inequities. Entin, S.